Future outlook enhanced by Google Trends

The latest edition of the Commonwealth Bank Household Spending Intentions (HSI) series, data to end-October, supports the RBA’s view that the economy has reached a gentle turning point. But the improvement is quite modest given the tax rebates and interest rate cuts delivered in recent months. The sharp upswing in the Home Buying intentions series continues and is now approaching the record highs seen in H1 2017. After a poor September, there is a small pick-up in the Retail Sales intentions data in October. More broadly, there was some further improvement in Travel spending, Entertainment and Education last month. Health & Fitness spending has, however, turned down, while the recent slight improvement in Motor vehicle purchase intentions from deeply negative territory has now stalled.

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Whether you are running a business, a policy maker, an investor or one of Australia’s corporate enterprises - insights on shifting consumer spending intentions are critical in planning for the future. Our Household Spending Intentions series combines our spending data, one of Australia’s largest financial data sources, with Google Trends publically available search activity. By connecting actual spending data to intentional data, our analysis provides an early indication of prospective spending trends across seven key sectors.  This series covers about 55% of the total household spend. Future releases will look to expand our coverage to the remaining spending components.

Home Buying
Spending Intentions

  • The sharp uptrend in home buying intentions continues
  • Home buying intentions rose further in October and are now close to the record highs seen in H1 2017
  • Current HSI readings are consistent with an ongoing pick up in dwelling prices

Retail
Spending Intentions

  • Retail spending intentions are bouncing around at present but the lift in October means a modest uptrend is in place
  • That said, that turning point is pretty modest when benchmarked against record low mortgage rates, the wealth boost from rising house prices, solid jobs growth and tax rebates

Motor Vehicles
Spending Intentions

  • Motor vehicle purchase intentions remain deep in negative territory
  • And the tentative signs of a turn up in the past few months have stalled

Entertainment
Spending Intentions

  • Entertainment spending intentions are rising again
  • The uptrend in this very discretionary spending component is a sign that consumers are not completely beaten down

Travel
Spending Intentions

  • Beyond the dominant retail component, spending intentions in other areas like travel are a little more positive
  • Travel spending intentions are turning up, albeit from low levels
  • The trend in Australian residents holidaying overseas has slowed. The pick-up in the Travel HSI may be an indication that a lower AUD is encouraging domestic holidays instead

Education
Spending Intentions

  • Education spending intentions are high and rising
  • Policy makers and economic commentators can all see the need to lift productivity growth. Rising infrastructure spending is one policy response that will help
  • But human capital is just as important as physical capital in driving productivity. So the positive signal from the Education HSI is encouraging

Health and Fitness
Spending Intentions

  • Intentions to spend on Health & Fitness have levelled out
  • But the levelling is occurring at a solid rate of growth
  • The trends indicate households are willing to allocate scarce disposable income to driving health & fitness spending with little impact from the vagaries of the economic cycle

Enhanced by Google Trends

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